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Technically, isn’t selling one asset and buying another precisely the definition of a taxable event? I don’t see how tether helps you avoid taxes unless you’re
by grey-area 4y ago
Technically, isn’t selling one asset and buying another precisely the definition of a taxable event?
I don’t see how tether helps you avoid taxes unless you’re going to lie about your transactions and hope nobody notices.
- nikanj 4y agoYou answered your own question
- slyfocks 4y agoIt is indeed a taxable event. People who exchange crypto for “stable”coins are generally doing so to stay out of the KYC banking realm so they can lie about their transactions to their country’s tax authorities.
- mateuszf 4y agoMaybe in US, but not in all countries.
- robinduckett 4y agoIn the UK, it is only a taxable event when the coin is exchanged to a "readily convertible asset", i.e. Bitcoin, Mainnet ETH.
- cmsd2 4y agoI don’t know where you got this advice from but this is precisely wrong from my reading of the rules. An asset exchange between two non legal tender assets is treated exactly the same as any other disposal and acquisition and absolutely is a chargeable event.
- leereeves 4y agoTether isn't readily convertible?
- cma 4y agoNot if we dont even know what it is backed by, readily convertible one minute, can't dump it for $.01 the next once it happens.
- cmsd2 4y agoPlease tell me this is a joke. The fact tether trades readily on an exchange is a major factor for it being convertible, even if at a price you don’t like.
- toss1 4y ago>>tether trades readily on an exchange is a major factor for it being convertible ... for now We've seen lots of the crypto exchanges fail to make exchanges for hours to days when things get hot Official stock exchanges have a standard practice of halting trading in stocks when unusual events happen. Sometimes this cools the market and things get back to normal, sometimes the thing has gone to zero when If Tether crashes to $0.01, I'd be a bit surprised if it didn't stop being convertible for a significant time.
- grey-area 4y agoAll currencies are readily convertible assets by definition.
- dropnerd 4y agoi pay my taxes. i make money providing liquidity between eth and usdc. when i'm not lp'ing, i see no reason to switch to usd so long as us-based attestations continue to be solid. the opportunity cost of being in usd on coinbase is missing lucrative nft deals.
- Jommi 4y agoYou're on the internet sir, this is not only an American website.
- deleted 4y ago[deleted]
- lupire 4y agoYou don't report income on every item you shuffle. In the spirit of US law (since crypto is t precisely classified), if you are a professional trader, you only pay taxes on your overall annual trading profits, not each individual trade. Same as how a a retail store doesn't have gains and losses on every individual item in inventory.
- thallium205 4y agoDon't you have to have some special tax license to treat earnings that way?
- dubswithus 4y agoNo, that’s not true. The IRS has given guidance on this. > explaining that virtual currency is treated as property for Federal income tax purposes and providing examples of how longstanding tax principles applicable to transactions involving property apply to virtual currency.[0] Also, every crypto tax software does exactly what you say is not required. A bit of signal there. [0] https://www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions https://www.irs.gov/individuals/international-taxpayers/freq...
- jallen_dot_dev 4y agoYou've never heard of a 8949, have you?
- amluto 4y agoI am not a tax expert, but you should read this: https://www.irs.gov/taxtopics/tc429 https://www.irs.gov/taxtopics/tc429 If you use one of the various mark-to-market rules, then you may well “only pay taxes on your overall annual trading profits”, but you pay it every year on unrealized gains too. Choose your poison.
- jallen_dot_dev 4y agoI think a lot of Americans are in for a surprise when they finally report their gains, the IRS audits them and does a little digging ("You reported a sale of USDT, where did the USDT come from? You say you traded BTC for it? You never reported a sale of BTC."), and they find out they have owed taxes on trades for years, plus penalties and interest.
- tzs 4y agoIf you sell something for actual money, and use that actual money to buy something else, that sale would usually be a taxable event (well, it would be a realization event which may or may not be a taxable event, but in casual conversation just saying "taxable event" is fine). If actual money is not involved, for example I trade my X with you for your Y, then it gets quite interesting. In the US there are generally two ways that tax law handles this. I don't know how far along the law is with fitting all the various cryptocurrency things into this. One way is to treat it for tax purposes as if I sold X at its fair market value and you sold Y at its fair market value, and then I bought Y and you bought X. I'm taxes on my gains from that imputed sale, and take that price as my basis in Y. Similar for you. The other way to treat it is as a non-realization event, putting off any tax consequences until I actually sell Y or trade it for something that gets handled as an imputed sale. My basis in Y is the same as the basis I had in X. What determines which of these applies is whether or not the exchange is a "like-kind exchange". If the exchange is a like-kind exchange it gets the "swap basis" approach. If it is not like-kind it gets the "imputed sale" approach. Sometimes this is clear cut. Suppose I bought an old guitar at garage sale 50 years ago for a couple dollars that is nowadays a valuable vintage guitar worth $100k, and 50 years ago you bought a new comic book that is now worth $100k to collectors. If we trade, that would be an imputed sale because guitars and comic books are not like-kind. When things are in the same category it gets much harder, and the case law is full of courts having to go deeply into philosophical questions of what makes things like-kind. Say we trade paintings. Are all paintings like-kind? Or would a Monet not be like-kind with a Picasso because they are different artists and/or different styles? Is a male horse like kind with a female horse? Is an electric guitar like kind with an acoustic guitar? Is a comic book that is valuable because of the first appearance of a character like-kind with a comic book that is valuable because of who inked it?